Use This Simple Trick to Improve Your Trading

Reading history can be enlightening…especially when it’s your own. 
 
When I first started trading, I reacted to pullbacks in an uptrend just like everybody else did: “Here we go! Price will crash from here! Time to sell everything!” At which point the price would pivot and move higher, thumbing its collective nose at me while I struggled to figure out what had just happened. I had to learn from these situations after the fact and understand that the “anchor trend” was still intact, and I had been “shaken out” like all the other chum in the market. 
 
I had to study my actions and learn to “fade” that temporary fear. After a while, I was able to stow my concerns and look to pullbacks as an opportunity to enter long. 
 
And then the crash of 2008 happened. Reading one of my entries from October 2008, it now sounds like a horror novel. Journal entries like “I’m not sure if this market will ever recover” are funny to read now, but it was the real deal at the time and certainly reason for concern. After seeing crash after crash occur that year and into 2009, I had to learn to study my fear and reactions after the fact, and learn to decode them as a signal for opportunity. 
 
Ultimately, what you learn to do over time is to detect your reaction as a human being to a normal situation that would create a fearful response, and try to learn to create a different response to it than the “fight or flight” response that we’re all programmed with. And the only way that you can create this feedback loop is to create some form of journal. I create a strategy journal for every different trading strategy to track the numbers, but I also maintain a written journal to record my perceptions to a certain situation, and it’s my job as a trader to decode that “normal” response and see if opportunity is on the other side. 
 
You must learn to think differently than the rest of the crowd if you want to do this for a living. Journaling your thoughts is the first step towards accomplishing this. 
 
In your corner…Doc Severson
 
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